Unit – I overview of Management
What is Management? Definitions
According to Harold Koontz,
"Management is the art of getting things done through and with people in
formally organized groups.“
Harold Koontz gave this definition
of management in his book "The Management Theory Jungle".
According to Henri Fayol,
"To manage is to forecast and to plan, to organise, to command, to co-
ordinate and to control.“
Henri Fayol gave this definition of management in his book "Industrial and
General Administration".
According to Peter Drucker,
"Management is a multi-purpose organ that manages business and manages
managers and manages workers and work.“
According to Mary Parker Follet,
"Management is the art of getting things done through people.“
Meaning of Management
According to Theo Heimann, management has three different meanings,
viz.,
Management as a Noun : refers to a Group of Managers.
Management as a Process : refers to the Functions of Management i.e.
Planning, Organising, Directing, Controlling, etc.
Management as a Discipline : refers to the Subject of Management.
Management is an individual or a group of individuals that accept
responsibilities to run an organization.
They Plan, Organize, Direct and Control all the essential activities of the
organization. Management does not do the work themselves.
They motivate others to do the work and co-ordinate (i.e. bring
together) all the work for achieving the objectives of the organisation.
Management brings together all Six Ms i.e.
1. Men and Women,
2. Money, Machines,
3. Materials,
4. Methods and
5. Markets.
They use these resources for achieving the objectives of the organisation such as
1. high sales,
2. maximum profits,
3. business expansion, etc.
Features of Management
Continuous and never ending process
Management is a Process. It includes four main functions, viz., Planning
Organizing, Directing and Controlling.
Getting things done through people
The managers do not do the work themselves. They get the work done
through the workers. The workers should not be treated like slaves. They
should not be tricked, threatened or forced to do the work.
Result oriented science and art
Management is result oriented because it gives a lot of importance to
"Results". Examples of Results like, increase in market share, increase in
profits, etc
Multidisciplinary in nature
Therefore, management uses knowledge from many different subjects such
as Economics, Information Technology, Psychology, Sociology, etc.
Therefore, it is multidisciplinary in nature.
A group and not an individual activity
Management is not an individual activity. It is a group activity.
It uses group (employees) efforts to achieve group (owners) objectives.
It tries to satisfy the needs and wants of a group (consumers).
Nowadays, importance is given to the team (group) and not to individuals.
Follows established principles or rules
Management follows established principles, such as division of work,
discipline, unity of command, etc.
Aided but not replaced by computers
Now-a-days, all managers use computers. Computers help the managers to
take accurate decisions. However, computers can only help management.
Computers cannot replace management. This is because management takes
the final responsibility.
Situational in nature
Management makes plans, policies and decisions according to the situation. It
changes its style according to the situation. It uses different plans, policies,
decisions and styles for different situations.
Need not be an ownership
In small organisations, management and ownership are one and the same. However,
in large organisations, management is separate from ownership. The managers are
highly qualified professionals who are hired from outside. The owners are the
shareholders of the company.
Both an art and science
Management is result-oriented. Therefore, it is an Art. Management conducts
continuous research. Thus, it is also a Science.
Management is all pervasive
Management is necessary for running a business. It is also essential for running
business, educational, charitable and religious institutions. Management is a must
for all activities, and therefore, it is all pervasive.
Management is intangible
Management is intangible, i.e. it cannot be seen and touched, but it can be felt and
realised by its results. The success or failure of management can be judged only by
its results
Uses a professional approach in work
Managers use a professional approach for getting the work done from their
subordinates. They delegate (i.e. give) authority to their subordinates.
Dynamic in nature
Management is dynamic in nature. That is, management is creative and innovative.
An organisation will survive and succeed only if it is dynamic. It must continuously
bring in new and creative ideas, new products, new product features, new ads, new
marketing techniques, etc.
Importance of management
1.
It facilitates the achievement of goals through limited resources.
2.
It ensures smooth sailing in case of difficulties.
3.
It ensures continuity in the organization.
4.
It focuses on group efforts.
5. It is the key to the economic growth.
Challenges to management
Managers may have to face many challenges in the years to come in doing their job.
These challenges involve complex issues to deal
1. LPG
2. Changing life styles and changing values
3. Increasing life expectancy
4. More expectations of customers and employees in particular and society as a
whole in general
5. Eroding business ethics
6. Depleting financial and non financial resources
7. Changing technology
8. Bottlenecks in the basic infrastructure
9. Environmental degradation through pollution
FUNCTIONS OR PROCESS OF MANAGEMENT
Different experts have classified functions of management.
According to George & Jerry, “There are four fundamental functions of
management i.e. planning, organizing, actuating and controlling”.
According to Henry Fayol, “To manage is to forecast and plan, to organize, to
command, & to control”.
Whereas Luther Gullick has given a keyword ‘POSDCORB’
•where Pstands for Planning,
•O for Organizing,
•S for Staffing,
•D for Directing,
• Co for Co-ordination,
•R for reporting & B for Budgeting
But the most widely accepted are functions of management given by KOONTZ and
O’DONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.
Planning
It is the basic function of management. It deals with chalking out a future course of
action & deciding in advance the most appropriate course of actions for achievement
of pre-determined goals.
According to KOONTZ, “Planning is deciding in advance – what to do, when to do
& how to do. It bridges the gap from where we are & where we want to be”. A plan
is a future course of actions.
Thus, planning is a systematic thinking about ways & means for accomplishment of
predetermined goals.
Planning is necessary to ensure proper utilization of human & nonhuman resources.
It is all pervasive, it is an intellectual activity and it also helps in avoiding confusion,
uncertainties, risks, wastages etc.
Planning involves essentially four stages
1.
Identifying the goals to be achieved
2.
Exploring the courses of action available to search this goal
3.
Evaluating each course of action on merits
4.
Finally selecting the best course of action for implementation
Elements of planning
1.
Forecasts
2.
Objectives
3.
Policies
4.
Strategies
5.
Programme
6.
Procedures
7.
Schedules
8.
Budgets
Organizing
It is the process of bringing together physical, financial and human resources and
developing productive relationship amongst them for achievement of organizational
goals.
According to Henry Fayol, “To organize a business is to provide it with everything
useful or its functioning i.e. raw material, tools, capital and personnel’s”.
Organizing as a process involves:
• Identification of activities.
• Classification of grouping of activities.
• Assignment of duties.
• Delegation of authority and creation of responsibility.
• Coordinating authority and responsibility relationships.
Staffing
The main purpose of staffing is to put right man on right job i.e. square pegs in
square holes and round pegs in round holes.
According to Kootz & O’Donell, “Managerial function of staffing involves
manning the organization structure through proper and effective selection, appraisal
& development of personnel to fill the roles designed un the structure”.
Staffing involves
1.
Manpower Planning (estimating man power in terms of searching, choose the
2.
person and giving the right place).
3.
Recruitment, selection & placement.
4.
Training & development.
5.
Remuneration.
6.
Performance appraisal.
7.
Promotions & transfer.
Directing
It is that part of managerial function which actuates the organizational methods to
work efficiently for achievement of organizational purposes.
Direction is that inert-personnel aspect of management which deals directly with
influencing, guiding, supervising, motivating sub-ordinate for the achievement of
organizational goals.
Direction has following elements:
• Supervision
• Motivation
• Leadership
• Communication
Controlling
It implies measurement of accomplishment against the standards and correction of
deviation if any to ensure achievement of organizational goals. The purpose of
controlling is to ensure that everything occurs in conformities with the standards.
Therefore controlling has following steps:
(i) Establishment of standard performance.
(ii) Measurement of actual performance.
(iii) Comparison of actual performance with the standards and finding out deviation
ifany.
(iv) Corrective action.
SIGNIFICANCE OR IMPORTANCE OF MANAGEMENT
Encourages Initiative Management encourages initiative. Initiative means to do
the right thing at the right time without being told or influenced by the superior.
Encourages Innovation Management also encourages innovation in the
organisation. Innovation brings new ideas, new technology, new methods, new
products, new services, etc.
Facilitates growth and expansion Management makes optimum utilization of
available resources. It reduces wastage and increase efficiency. It encourages team
work and motivates employees. It also reduces absenteeism and labor turnover.
Improves life of workers Management shares some of its profits with the workers.
It provides the workers with good working environment and conditions. It also
gives the workers many financial and non-financial incentives.
Improves corporate image If the management is good, then the organization will
produce good quality goods and services. This will improve the goodwill and
corporate image of the organization
Motivates employees Management motivates employees by providing financial and
non-financial incentives. These incentives increase the willingness and efficiency of
the employees.
Improves relations Management improves relations between individuals, groups,
departments and between levels of management. Better relations lead to better team
work. Better team work brings success to the organization.
Encourages Team Work Management encourages employees to work as a team. It develops
a team spirit in the organisation. This unity brings success to the organisation
Levels of Management
Many managers work in an organisation. However, these managers do not work at the same
level.
They work and operate at different positions. Hierarchy of these managerial positions is
called Levels of Management.
.
Three Levels of Management
Generally, there are Three Levels of Management, viz.,
Administrative or Top Level of Management.
Executive or Middle Level of Management.
Supervisory or Lower Level of Management.
At each level, individual manager has to carry out different roles and functions.
Top Level of Management
1. The Top Level Management consists of the Board of Directors (BOD) and the Chief
Executive Officer (CEO).
2. The Chief Executive Officer is also called General Manager (GM) or Managing Director
(MD) or President.
3. The Board of Directors are the representatives of the Shareholders, i.e. they are selected
by the Shareholders of the company.
4. Similarly, the Chief Executive Officer is selected by the Board of Directors of an
organisation.
The main role of the top level management is summarized as follows :-
1.
The top level management determines the objectives, policies and plans of the
organisation.
2.
They mobilises (assemble and bring together) available resources.
3.
The top level management does mostly the work of thinking, planning and
deciding. Therefore, they are also called as the Administrators and the Brain of
•They spend more time in planning and organising.
•They prepare long-term plans of the organisation which are generally made for 5
to 20 years.
•The top level management has maximum authority and responsibility. They are the
top or final authority in the organisation. They are directly responsible to the
Shareholders, Government and the General Public. The success or failure of the
organisation largely depends on their efficiency and decision making.
•They require more conceptual skills and less technical Skills.
Middle Level of Management
1.
The Middle Level Management consists of the Departmental Heads (HOD),
Branch Managers, and the Junior Executives.
2.
The Departmental heads are Finance Managers, Purchase Managers, etc.
3.
The Branch Managers are the head of a branch or local unit.
4.
The Junior Executives are Assistant Finance Managers, Assistant Purchase
Managers, etc.
5.
The Middle level Management is selected by the Top Level Management.
The middle level management emphasize more on following tasks :1. Middle level management gives recommendations (advice) to the top level management.
2. It executes (implements) the policies and plans which are made by the top level
management.
3. It co-ordinate the activities of all the departments.
4. They also have to communicate with the top level Management and the lower level
management.
5. They spend more time in co-ordinating and communicating.
6. They prepare short-term plans of their departments which are generally made for 1 to 5
years.
7. The middle Level Management has limited authority and responsibility.
8. They are intermediary between top and lower management.
9. They are directly responsible to the chief executive officer and board of directors.
Require more managerial and technical skills and less conceptual skills.
Lower Level of Management
The lower level management consists of the Foremen and the Supervisors. They are selected
by the middle level management. It is also called Operative / Supervisory level or First Line
of Management.
The lower level management performs following activities :1. Lower level management directs the workers / employees.
2. They develop morale in the workers.
3. It maintains a link between workers and the middle level management.
4. The lower level management informs the workers about the decisions which are taken by
the management. They also inform the management about the performance, difficulties,
feelings, demands, etc., of the workers.
5. They spend more time in directing and controlling.
6. The lower level managers make daily, weekly and monthly plans.
7. They have limited authority but important responsibility of getting the work done from
the workers.
8. Along with the experience and basic management skills, they also require more
technical and communication skills.
Objectives of Management
The objectives of management are narrated as under.
(i) Organizational objectives: Management is expected to work for the achievement of the
objectives of the particular organization in which it exists.
Organisational objectives include:
(a) Reasonable profits so as to give a fair return on the capital invested in business
(b) Survival and solvency of the business, i.e., continuity.
(c) Growth and expansion of the enterprise
(d) Improving the goodwill or reputation of the enterprise.
ii) Personal objectives: An organisation consists of several persons who have their own
objectives. These objectives are as follows:
(a) Fair remuneration for work performed
(b) Reasonable working conditions
(c) Opportunities for training and development
(d) Participation in management and prosperity of the enterprise
(e) Reasonable security of service.
iii) Social objectives: Management is not only a representative of the owners and workers,
but is also responsible to the various groups outside the organization. It is expected to fulfill
the
objectives of the society which are given below:
(a) Quality of goods and services at fair price to consumers.
(b) Honest and prompt payment of taxes to the Government.
(c) Conservation of environment and natural resources.
(d) Fair dealings with suppliers, dealers and competitors.
(e) Preservation of ethical values of the society
Managerial roles (Mintzberg)
Henry Mintzberg identified ten different roles, separated into three categories. The
categories he defined are as follows
Interpersonal
Figure head
Leader
liaison
Informational
Monitor
Disseminator
Spokes person
Decisional
Entrepreneur
Negotiator
Resource allocator
Disturbance handler
Interpersonal Roles
The ones that, like the name suggests, involve people and other ceremonial duties.
It can be further classified as follows
• Leader – Responsible for staffing, training, and associated duties.
• Figurehead – The symbolic head of the organization.
• Liaison (LINK, CONTACT) – Maintains the communication between all
contacts and informers that compose the organizational network.
b) Informational Roles
Related to collecting, receiving, and disseminating information.
• Monitor – Personally seek and receive information, to be able to understand the
organization.
• Disseminator – Transmits all import information received from outsiders to the
members of the organization.
• Spokesperson – On the contrary to the above role, here the manager transmits
the organization’s plans, policies and actions to outsiders.
c) Decisional Roles
• Entrepreneur – Seeks opportunities. Basically they search for change, respond to
it, and exploit it (make use of it , develop, utilize) .
• Negotiator – Represents the organization at major negotiations.
• Resource Allocator – Makes or approves all significant decisions related to the
allocation of resources.
• Disturbance Handler – Responsible for corrective action when the organization
faces disturbances.
TRENDS AND
SCENARIO
CHALLENGES
OF
MANAGEMENT
IN
GLOBAL
The management functions are planning and decision making, organizing. leading,
and controlling — are just as relevant to international managers as to domestic
managers.
International managers need to have a clear view of where they want their firm to be
in the future; they have to organize to implement their plans: they have to motivate
those who work lot them; and they have to develop appropriate control mechanisms.
1. Globalization
2. Development of Environment
3. Quality and Productivity
4. Ethics and Social Responsibility
5. Innovation and Change
6. Technological Development
7. Knowledge Management
8. Work Force Diversity
9. Multicultural Effects
10. Empowerment of Employees
a) Planning and Decision Making in a Global Scenario
To effectively plan and make decisions in a global economy, managers must have a
broad based understanding of both environmental issues and competitive issues.
They need to understand local market conditions and technological factor that will
affect their operations. At the corporate level, executives need a great deal of
information to function effectively.
b) Organizing in a Global Scenario
Managers in international businesses must also attend to a variety of organizing
issues.
For example, General Electric has operations scattered around the globe.The firm
has made the decision to give local managers a great deal of responsibility for how
they run their business
Managers in an international business must address the basic issues of organization
structure and design, managing change, and dealing with human resources.
c) Leading in a Global Scenario
We noted earlier some of the cultural factors that affect international organizations.
Individual managers must be prepared to deal with these and other factors as they
interact people from different cultural backgrounds .
Supervising a group of five managers, each of whom is from a different
state in the United States, is likely to be much simpler than supervising a group of
five managers, each of whom is from a different culture. Managers must understand
how cultural factors affect individuals.
d) Controlling in a Global Scenario
Finally, managers in international organizations must also be concerned with
control. Distances, time zone differences, and cultural factors also play a role in
control. For example, in some cultures, close supervision is seen as being
appropriate, whereas in other cultures, it is not Likewise, executives in the United
States and Japan may find it difficult to communicate vital information to one
another because of the time zone differences.
Various functional areas of management are:
Ø
Production management
Ø
Marketing management
Ø
Financial management
Ø
Personal management
Ø
IT and R & D
Production management:
Production means creation of utilities by converting raw material in to final product
by various scientific methods and regulations. It is very important field of
management. Various sub-areas of the production department are as follows.
Plant lay out and location: This area deals with designing of plant layout, decide
about the plant location for various products and providing various plant utilities
Production planning: Managers has to plan about various production policies and
production methods.
Material management: This area deals with purchase, storage, issue and control
of the material required for production department.
Research and Development: This area deals with research and developmental
activities of manufacturing department. Refinement in existing product line or
develop a new product are the major activities.
Quality Control: Quality control department works for production of quality
product by doing various tests which ensure the customer satisfaction.
Marketing management:
Marketing management involves distribution of the product to the buyers. It may
need number of steps. Sub areas are as follows
Advertising: This area deals with advertising of product, introducing new product in
market by various means and encourage the customer to buy thee products.
Sales management: Sales management deals with fixation of prices, actual transfer
of products to the customer after fulfilling certain formalities and after sales services.
Market research: It involves in collection of data related to product demand and
performance by research and analysis of market.
Finance and accounting management:
Financial and accounting management deals with managerial activities related to
procurement and utilization of fund for business purpose. Its sub areas are as
follows
Financial accounting: It relates to record keeping of various financial transactions
their classification and preparation of financial statements to show the financial
position of the organization.
Management accounting: It deals with analysis and interpretation of financial
record so that management can take certain decisions on investment plans, return to
investors and dividend policy
Taxation: This area deals with various direct and indirect taxes which organization
has to pay.
Costing: Costing deals with recording of costs, their classification, analysis and cost
control.
Personnel Management:
Personnel management is the phase of management which deals with effective use
and control of manpower. Following are the sub areas of Personnel management
Personnel planning: This deals with preparation inventory of available manpower
and actual requirement of workers in organization.
Recruitment and selection: This deals with hiring and employing human being for
various positions as required.
Training and development: Training and development deals with process of
making the employees more efficient and effective by arranging training
programmes. It helps in making team of competent employees which work for
growth of organisation.
Wage administration: It deals in job evaluation, merit rating of jobs and making
wage and incentive policy for employees.
Industrial relation: It deals with maintenance of overall employee relation,
providing good working conditions and welfare services to employees.